Mission-Aligned Investing

Five years out of oil, the RBF isn't looking back

On Monday, the Rockefeller Brothers Fund (RBF) released Investing in Our Mission, a new case study detailing how its investment returns beat market benchmarks since divesting from fossil fuels five years ago. Financial data included in the study shows the RBF posted an average annual net return of 7.76 percent over the five-year period that ended December 31, 2019. Over the same period, an index portfolio made up of 70 percent stocks and 30 percent bonds—including coal, oil, and gas holdings—returned 6.71 percent annually.

When the RBF, a philanthropic foundation founded by the grandsons of oil titan John D. Rockefeller, announced its decision to divest in September 2014, the move was considered largely symbolic: The family was betting against the very industry that had made its name synonymous with wealth and power. Citing the moral case against fossil fuel investments, the Fund, which pours about $15 million each year into climate change solutions, set out also to make a financial case, that fossil fuel holdings would decrease in value as the world shifted away from carbon-intensive energy to mitigate the impacts of global warming.

“When we joined the divestment movement, we were convinced that a more profitable and less risky investment portfolio could be constructed without exposure to fossil fuels,” said Valerie Rockefeller, great-great-granddaughter of John D. Rockefeller and chair of the RBF board of trustees. “Now we have five years of financial data to back it up.”

The divestment movement accounted for just $50 billion in global assets under management when the Rockefeller Brothers Fund signed on in 2014. That number has now ballooned to around $12 trillion today, as advocates like the RBF and its grantees press other foundations, universities, governments, companies, and even banks to withdraw their money from the fossil fuel industry. The report cites recent moves by financial powerhouses like BlackRock and Goldman Sachs as further evidence that fossil fuel stocks are increasingly seen as poor investments.

“The rationale for continued investment in gas and oil is fading fast,” said Stephen Heintz, president and CEO of the Rockefeller Brothers Fund.

The coronavirus pandemic has helped prove the case, as just eight weeks of reduced consumption—a drop in the bucket of what will be required to curb global climate change—due to grounded flights, limited commuting, and suppressed economic activity have seen crude futures plummeting below zero. The RBF report includes 2020 first quarter data that suggests its earlier departure from fossil fuels extended its financial outperformance and shielded the endowment from some of the market volatility this spring.

“We spent the last five years proving oil was bad not only for the environment but for the bottom line,” said Heintz. “COVID 19 did it in two months.”

The Rockefeller Brothers Fund investment portfolio is now 99 percent fossil fuel free. Coal and tar sands account for less than 0.1 percent of its $1.1 billion portfolio; oil and gas comprise another 0.9 percent and falling. Since announcing its commitment to divest, the RBF has also committed 15 percent of its endowment to market-rate impact investments in renewable energy, sustainable agriculture, microfinance, workforce development, and more.

“Oil is obviously a definitional part of my family’s past,” said Rockefeller. “But it has no place in our future.”